Most people strive to save more money, but experts say too many variables are making it harder to set money aside for emergencies.
"Costs have gone up. Inflation is wearing on household budgets," said Stephen Kates, CFP and financial analyst at Bankrate. "People are trying to make their dollar stretch further. And in doing so, there's a little bit left over to simply pad the emergency fund."
The struggle to build savings
Bankrate's annual emergency savings report reveals 58% of Americans haven't been able to increase their emergency savings over the past year. They either have less savings or about the same.
The lack of savings is not concentrated among younger adults.
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Financial pressure appears to peak during midlife, according to data from Socialprofiler, an AI platform that analyzes social media profiles to gather consumer insights.
Socialprofiler founder Tony Noskov said the affordability crisis is no longer a temporary phase or "generational hiccup."
"It's a permanent condition shaping how Americans in their 30s, 40s, and 50s are living every day," he said.
Put money in savings or pay off debt?
Many Americans face the common dilemma: pay down debt or focus on increasing savings? Financial experts say it doesn't have to be an either-or decision.
Rod Griffin, senior director of consumer education and advocacy at Experian, said tackling high-interest debt is the best money-saving approach to paying down debt.
However, knocking out smaller balances first acts as a strong motivational tool.
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"Math doesn't recognize human emotion," Griffin said. "When something just seems like it's not going anywhere, it can create frustration and cause you to give up, which is the worst possible outcome."
Outside factors, like higher energy bills and more expensive insurance plans, will continue to interfere with savings goals. These mounting costs result in less money saved and reduced peace of mind for American families.
But experts emphasize that building an emergency fund doesn't require thousands of dollars upfront.
"You're one unlucky day away from having to go into debt," Kates said. "The importance of an emergency fund -- even a small one, even a few hundred dollars -- is that it puts a little distance between you and whatever that pending crisis is. It turns crisis into simply inconvenience."
Financial advisers suggest several strategies for building savings:
- Directing tax refunds to your savings account
- Taking advantage of three-paycheck months by saving the extra income
- Automating savings by setting up automatic transfers
How much an individual needs in savings varies by family and lifestyle. Griffin said $20-$50 per paycheck helps to build emergency funds over time.
"Having savings is going to help you weather those financial difficulties and make sure that you get over those unexpected expenses instead of them being emergency expenses," he said.
